Jahrneshwar Nagrik Sahkari Bank Ltd, Bhopal V. ACIT 2 (1), Bhopal

ITA 460/Ind/2018

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 7867 (ITAT-INDORE)
• Duration Of Justice: 1 year(s) 8 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-01-2020
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 23-12-2019
• Assessment Year: 2013-2014
• Appeal Filed On: 11-05-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: PUNEET KUMAR
• Assessee Lawyers: ARPIT GOUR
• Keywords: Bad and doubtful debts
• Section: 143(3)

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL, INDORE BENCH, INDORE BEFORE SHRI KUL BHARAT, JUDICIAL MEMBER AND SHRI MANISH BORAD, ACCOUNTANT MEMBER ITA NO.460/IND/2018 ASSESSMENT YEAR: 2013-14 APPELLANT BY SHRI ANIL KAMAL GARG & ARPIT GOUR, A R REVENUE BY SHRI PUNEET KUMAR, SR. DR DATE OF HEARING 22 .01.2020 DATE OF PRONOUNCEMENT 28 . 01.2020 O R D E R PER MANISH BORAD, AM. THE ABOVE CAPTIONED APPEAL FILED AT THE INSTANCE OF ASSESSEE PERTAINING TO ASSESSMENT YEAR 2013-14 IS DIRECTED A GAINST THE ORDERS OF LD. COMMISSIONER OF INCOME TAX (APPEALS) (IN SHORT LD.CIT(A)], BHOPAL-1 DATED 15.02.2018 WHICH IS AR ISING OUT OF THE ORDER U/S 143(3) OF THE INCOME TAX ACT 1961(IN SHOR T THE ACT) DATED 22.02.2016 FRAMED BY ACIT-2(1) BHOPAL. 2. ASSESSEE HAS RAISED FOLLOWING GROUNDS OF APPEAL; JHARNESHWAR NAGRIK SAHKARI BANK LTD. BHOPAL VS. ACIT - 2(1) BHOPAL (APPELLANT) (REVENUE ) PAN NO. AAAAJ9690E ITANO.460/IND/2018 JHARNESHWAR NAGRIK SAHKARI BANK LTD. 2 GROUNDS OF INCOME-TAX APPEAL BEFORE THE HON'BLE I NCOME-TAX APPELLATE TRIBUNAL, INDORE BENCH, INDORE, AGAINST T HE APPELLATE ORDER PASSED UNDER S. 250/143(3) OF THE INCOME-TAX ACT, 1961 BY THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS)-I, BHOPAL, PERTAINING TO THE A.Y. 2013-14 IN RESPONSE TO THE A PPEAL FILED AGAINST THE ASSESSMENT ORDER UNDER S. 143(3) OF THE ACT, PASSED BY THE LEARNED ASSISTANT COMMISSIONER OF INCOM E- TAX, 2(1), BHOPAL. 1A). THAT, THE LEARNED CIT(A) GROSSLY ERRED, BOTH O N FACTS AND IN LAW, IN CONFIRMING THE ADDITION OF RS.1,29,56,000/- MADE BY THE AO UNDER S.41(1)(A) OF THE ACT WITHOUT PROPERLY CONS IDERING AND APPRECIATING THE EXPLANATIONS OF THE APPELLANT MADE BEFORE HIM. IB). THAT, THE LEARNED CIT(A) GROSSLY ERRED, BOTH ON FACTS AND IN LAW, IN CONFIRMING THE ADDITION OF RS.1,29,56,000/- MADE BY THE AO UNDER S.41(1)(A) OF THE ACT WITHOUT PROPERLY CON SIDERING AND APPRECIATING THE MATERIAL FACT THAT THE TRANSFER OF RS.1,29,56,0001- FROM THE PROVISIONS FOR BAD & DOUBTFUL DEBTS TO BUILDING FUND HAD NOT RESULTED INTO CESSATION OF ANY LIABILITY AS CONTEMPLATED UNDER THE PROVISIONS OF S.41 (1) OF THE ACT. 1C). THAT, THE LEARNED CIT(A) GROSSLY ERRED, BOTH O N FACTS AND IN LAW, IN CONFIRMING THE ADDITION OF RS.1,29,56,000/- MADE BY THE AO UNDER S.41(1)(A) OF THE ACT WITHOUT PROPERLY CON SIDERING AND APPRECIATING THE MATERIAL FACT THAT THE APPELLANT H AD NEITHER OBTAINED ANY AMOUNT, IN ANY MANNER, IN RESPECT OF TH E PROVISION FOR BAD & DOUBTFUL DEBTS NOR ANY BENEFIT H AS GOT ACCRUED TO IT BY WAY OF CESSATION OR REMISSION OF AN Y TRADE LIABILITY, AND THEREFORE, THE AMOUNT SO TRANSFERRED F ROM ONE FUND TO ANOTHER FUND COULD NOT BE DEEMED TO BE PROFITS AND GAINS OF BUSINESS OR PROFESSION UNDER THE PROVISIONS OF CLAU SE (A) OF SUB- SECTION (1) TO SECTION 41 OF THE ACT. 1 D). THAT, WITHOUT PREJUDICE TO THE ABOVE, THE LEA RNED CIT(A) GROSSLY ERRED, BOTH ON FACTS AND IN LAW, IN CONFIRMI NG THE ADDITION OF RS.1 ,29,56,000/- MADE BY THE AO UNDER S.41(1)(A) OF THE ACT WITHOUT CONSIDERING AND APPRECIATING THE MAT ERIAL FACT THAT NO SPECIFIC DEDUCTION WAS ALLOWED TO THE APPELL ANT IN RESPECT OF THE PROVISION FOR BAD AND DOUBTFUL DEBTS FOR COMPUTING THE INCOME OF THE YEAR IN WHICH SUCH PROV ISION WAS MADE. ITANO.460/IND/2018 JHARNESHWAR NAGRIK SAHKARI BANK LTD. 3 3. AT THE OUTSET, LD. COUNSEL FOR THE ASSESSEE REQU ESTED FOR SETTING ASIDE ALL THE ISSUES TO THE FILE OF LD. ASSESSING O FFICER BY SUBMITTING THAT THE ALLEGED ADDITION U/S 41(1)(A) OF THE ACT A T RS.1,29,56,000/- NEEDS VERIFICATION AT THE END OF THE ASSESSING OFFI CER FOR EXAMINING THE ACTUAL AMOUNT OF BAD & DOUBTFUL DEBTS RECOVERED IN THE PAST YEARS AND ALSO TO VERIFY THE FACT THAT MAJOR AMOUNT S OF THE PROVISION FOR BAD & DOUBTFUL DEBTS DEBITED TO THE PROFIT AND LOSS ACCOUNT WERE DISALLOWED IN THE INCOME TAX RETURN. IN OTHER WORDS , THEY WERE ADDED BACK TO THE INCOME AND NO BENEFIT WAS CLAIMED . REFERENCE WAS ALSO MADE TO VARIOUS DOCUMENTS FILED IN THE PAP ER BOOK IN THE FORM OF FINANCIAL STATEMENT COMPUTATION OF INCOME F ROM F.Y. 2003- 04 TO F.Y. 2013-14. 4. PER CONTRA LD. DEPARTMENTAL REPRESENTATIVE (DR) OBJECTED TO THIS REQUEST OF LD. COUNSEL FOR THE ASSESSEE AND PRAYED FOR CONFIRMING THE ADDITION THEREBY SUPPORTING THE FINDING OF BOTH THE LOWER AUTHORITIES. 5. WE HAVE HEARD RIVAL CONTENTIONS AND PERUSED THE RECORDS PLACED BEFORE US. SOLE GRIEVANCE OF THE ASSESSEE IN THIS A PPEAL RELATES TO ADDITION U/S 41(1)(A) OF THE ACT AT RS.1,29,56,000/ - FOR THE ALLEGED TRANSFER OF AMOUNT FROM THE PROVISIONS FOR BAD & DO UBTFUL DEBTS TO THE BUILDING FUND ACCOUNT. LD. ASSESSING OFFICER IN VOKED THE PROVISION OF U/S 41(1)(A) OF THE ACT ON ACCOUNT OF REMISSION AND CESSATION OF THE LIABILITY WHICH IN THIS CASE WAS T RANSFER OF AMOUNT FROM PROVISION FOR BAD & DOUBTFUL DEBTS TO THE BUIL DING FUND ACCOUNT. FROM GOING THROUGH THE FINDING OF LD. CIT( A), WE OBSERVE ITANO.460/IND/2018 JHARNESHWAR NAGRIK SAHKARI BANK LTD. 4 THAT THE ALLEGED ADDITION WAS CONFIRMED BY OBSERVIN G THAT THOUGH THIS TRANSFER OF BALANCE FROM THE ACCOUNT OF PROVIS IONS FOR BAD & DOUBTFUL DEBTS TO THE BUILDING, BENEFIT HAS BEEN AC CRUED TO THE ASSESSEE AS THE ALLEGED AMOUNT OF RS.1,29,56,000/- WHICH HAD BEEN ALLOWED AS DEDUCTION U/S 36(1)(VIIA) OF THE ACT IN EARLIER YEARS IS NO LONGER REQUIRED AS A PROVISIONS AND THE SAME, THERE FORE, AMOUNT TO CESSATION OF LIABILITY ALLOWED EARLIER. SO THE IMPETUS OF LD. CIT(A) WHILE DECIDING AGAINST THE ASSESSEE WAS THAT A BENE FIT HAS BEEN CLAIMED U/S 36(1)(VIIA) FOR THE EARLIER YEARS FOR T HE ALLEGED AMOUNT. 6. HOWEVER, AS CONTENDED BY THE LD. COUNSEL FOR THE ASSESSEE REFERRING TO PAGE 30 OF THE PAPER BOOK ALONG WITH REFERENCE TO COMPUTATION OF INCOME AND FINANCIAL STATEMENTS FOR F.YS. 2003-04 TO 2013-14, IT HAS BEEN SUBMITTED THAT THE PROVISIO NS MADE FOR BAD & DOUBTFUL DEBTS U/S 36(1)(VIIA) OF THE ACT IN THE EARLIER YEARS HAD NOT BEEN TOTALLY ALLOWED, AS A DEDUCTION AGAINST TH E REVENUE BECAUSE MAJOR PORTION OF THE PROVISION OF BAD & DOU BTFUL DEBTS WERE DISALLOWED AND ADDED BACK TO THE INCOME. IT WAS ALS O CONTENDED THAT TAXABILITY OF AN AMOUNT U/S 41(1)(A) OF THE AC T WILL ARISE ONLY IN RELATION TO THE BAD & DOUBTFUL DEBTS RECOVERED BY T HE ASSESSEE AND THE EXERCISE NEEDS TO BE UNDERTAKEN BY THE ASSESSIN G OFFICER. 7. WE, THEREFORE, IN THE GIVEN FACTS AND CIRCUMSTAN CES OF THE CASE, AND IN THE INTEREST OF JUSTICE ACCEPT THE REQUEST O F THE LD. COUNSEL FOR THE ASSESSEE AND RESTORE ALL THE ISSUES RAISED IN THIS APPEAL TO THE LD. AO WITH A DIRECTION TO CARRY OUT AN EXERCIS E OF MAKING VERIFICATION OF COMPUTATION OF INCOME AND FINANCIAL STATEMENTS FOR ITANO.460/IND/2018 JHARNESHWAR NAGRIK SAHKARI BANK LTD. 5 F.Y. 2003-04 TILL 2012-13, IN ORDER TO FIND THE ACT UAL AMOUNT OF PROVISION OF BAD & DOUBTFUL DEBTS ALLOWED AS AN EXP ENDITURE TO THE ASSESSEE AS WELL AS THE AMOUNTS OF BAD DEBTS RECOVE RED DURING THESE YEARS AND AFTER CARRYING OUT OF THIS EXERCISE LD. AO SHOULD PROCEED WITH THE APPLICATION OF PROVISION OF U/S 41 (1)(A) OF THE ACT IF APPLICABLE ON THE ASSESSEE AND DECIDE IN ACCORDANCE WITH LAW. THUS, ALL THE GROUNDS RAISED BY THE ASSESSEE ARE AL LOWED FOR STATISTICAL PURPOSES. 8. IN THE RESULT APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. THE ORDER PRONOUNCED IN THE OPEN COURT ON 28 .01.2 020. SD/- SD/- ( KUL BHARAT) (MANISH BORAD) JUDICIAL MEMBER ACCOUNTANT MEMBER / DATED : 28 TH JANUARY, 2020 PATEL/PS COPY TO: THE APPELLANT/RESPONDENT/CIT CONCERNED/CIT (A) CONCERNED/ DR, ITAT, INDORE/GUARD FILE. BY ORDER, ASSTT.REGISTRAR, I.T.A.T., INDORE